For the first time, Nestle India, a packaged foods manufacturer, is planning to recruit tasters and connoisseurs of premium foods for its soon-to-be-launched super-premium Nespresso coffee and boutiques.

“The marketing strategy is quite distinct. For instance, establishing a boutique would require a substantial investment, at least a couple of crores. Thus, the branding, positioning, advertising, and event support for the brand need to be notably different,” remarked Suresh Narayanan, the chairman of Nestle India. He emphasized that the company’s focus on premiumization will “usher in a new dimension, enhancing the company’s strengths in coffee, chocolates, and milk.”

Continue Exploring: Nestlé brings Nespresso to Indian market, customers to enjoy full selection by late 2024

Meanwhile, ITC is embracing artificial intelligence (AI) and machine learning (ML) to forecast demand and consumer trends within retail outlets and supply chains. This initiative also involves suggesting the most suitable product packaging for specific stores within its premium portfolio, which encompasses Fabelle chocolates, skincare, and deodorants.

Sandeep Sule, divisional chief executive of trade marketing and distribution at ITC Ltd, which produces Fiama body washes, Engage fragrances, and Fabelle chocolates, stated, “We are utilizing AI and ML models to strategically position our premium portfolio in stores.”

“We’ve established a comprehensive omni-channel distribution network that promotes our premium portfolio across various channels, extending beyond just metropolitan and tier 1 cities,” stated Sule. He highlighted that the contribution of their premium personal care portfolio has doubled within four years.

Continue Exploring: ITC leverages innovative packaging and product premiumization to elevate customer experience

FMCG giants like Nestle, ITC, Tata Consumer, Parle Products, Amul, Britannia, and Parag Milk Foods are embracing new skill sets, micro-segmenting consumers, and overhauling their sales, distribution, and marketing approaches to promote premium products. This marks a significant departure from their traditional strategies focused on selling daily essentials.

Mayank Shah, vice president of biscuit manufacturer Parle Products, emphasized the importance of identifying the target consumer for premium products and aligning strategies accordingly to avoid wastage of resources. He highlighted a shift towards utilizing data and AI for narrow customer targeting to facilitate cross-selling and upselling, a departure from previous practices. Presently, approximately 15-18% of Parle’s product portfolio qualifies as premium, defined as products priced at INR 200-250 per kg and above.

Tata Consumer Products is employing micro-segmentation strategies to reach specific consumer groups, with its premium range showing faster growth rates compared to the company’s overall performance. Sunil D’Souza, managing director at Tata Consumer Products, emphasized the significance of premiumization, citing a burgeoning middle class with increased disposable income as a driving force. This was highlighted in a note to shareholders within the company’s annual report for FY 23-24.

Continue Exploring: Premiumization and cost cuts boost margins for HUL, Tata Consumer, and Nestle India in Q1

The company is leveraging the trend of premiumization by offering products such as Himalayan Saffron and Preserves, dry fruits under the Tata Sampann brand, and ready-to-cook as well as ready-to-eat items under Tata Sampann Yumside in traditional retail settings. Additionally, they’re introducing direct-to-consumer brands like Tata Tea 1868 and Tata Coffee Sonnets, along with Tata Coffee Gold Cold Brew, aiming to provide “cafe-style experiences.”

Gujarat Cooperative Milk Marketing Federation (GCMMF), known for selling Amul ice-cream through pushcarts, retail outlets, and e-commerce platforms, has identified upscale parlors as a key focus channel. This initiative includes the establishment of Amul Ice Lounge stores, which specialize in stocking high-end ice-cream varieties. This shift in strategy is indicative of a broader trend observed across various consumer staple categories.

Parag Milk Foods, renowned for its cheese, milk, and ghee offerings, is actively promoting its premium Pride of Cows milk and dairy products as the standard bearer for the dairy industry. Akshali Shah, executive director at Parag Milk Foods, emphasized their commitment to delivering single-origin milk, ensuring consistency by sourcing from one farm and one breed directly to the consumer’s doorstep.

Continue Exploring: DFM Foods diversifies product range with larger pack sizes, targets premiumization strategy for growth